Sourcepoint on the Search for Alternative Publisher Compensation

Sourcepoint is the leading provider of publisher content compensation solutions, providing consumers with choice, and publishers with alternate funding models. What was the original vision of the company, and how has it evolved to where it stands today

Founded in June 2015, Sourcepoint was built to meet the expanding compensation challenges faced by premium publishers. We initially focused on providing a solution to combat the rise of ad blockers; empowering publishers to engage with ad block users and enter into a conversation about content compensation.

But our view was always that ad blocking was only a symptom of a larger issue, and our greater vision is to provide a solution that offers all users a choice in how they pay for the content they consume – whether they have an ad blocker installed or not. We want to help publishers maximize monetization while also improving the user experience, and we believe choice and transparency is vital to the long-term sustainability of the digital ecosystem.

To this end we’re already working with premium publishers, such as Dennis, AOL, and Gruner & Jahr, to offer a broader set of monetization options or content compensation models, including ad-free and ad-light experiences, subscriptions, whitelisting, and authentication. We’re particularly focusing on the development of cross-publisher subscriptions, which is where I see the future of Sourcepoint.

Previously, you were the Co-Founder & CEO of AdMeld, one of the earliest Supply Side Platforms (SSP) that sold to Google in 2011 for $400M. In your opinion, how has the programmatic and exchange landscape changed over the last few years? Where do you see it going in the next 5, or even 10 years?

Over the last few years there has been a growing emphasis on quality within the exchange space. Whether in traditional display or video, a number of high profile issues have highlighted the challenges of transacting in a programmatic environment, particularly its vulnerability to fraud as illustrated by Methbot.

Over the coming years the issues being brought to light as a result of ad blocking will form the foundation of the digital content ecosystem. Consumers have spoken and are telling publishers in no uncertain terms that the ad experience of the last decade will not work moving forward. The consumer experience is being brought front and center, and will serve as a focal point in the next iteration of programmatic and digital advertising as a whole.

Currently, most publishers (other than marquee brands like NYT, WSJ, FT, Economist, etc) monetize primarily through digital and mobile ads, whether it be through direct sold or programmatic channels. However, there are now so many advertising options for media buyers these days that many publishers are feeling downward pressure on their CPMs and revenue. What are some other ways in which you think publishers can monetize their audiences in the near future? (affiliate links, subscriptions, data partnerships, etc)

While advertising will continue to play a role in financing digital content, I think the majority of publishers understand the need to diversify revenue above and beyond standard desktop, and mobile ad offerings. This is inevitably leading to the development of alternative models and an increase in subscription models – with momentum growing every day as subscription spikes are driven by political events such as Trump’s election.

As we’ve seen in music and video – in the cases of Spotify and Netflix – there is significant consumer appetite for subscriptions that bundle together content from a variety of sources. We believe there is an opportunity for digital publishers, and we are engaging with media companies about their participation in Sourcepoint’s offering. We think a cross-publisher subscription solution where different types of content are bundled – perhaps by vertical – will be a major point of emphasis in 2018.

Aside from subscriptions, publishers could look to micro payments – such as our recently launched AltPay solution – or personalized ad experiences as alternatives to standard advertising. They could also incorporate a commerce element, which is something the New York Times is currently implementing well.

The most important thing is that there needs to be a transparent value exchange between the user and digital publisher, and that consumers are given a choice in how to pay – whether it be turning off an ad blocker, agreeing to view a video before accessing the site ad-free or paying a monthly subscription.

Why do you think a value exchange is essential for the online publishing ecosystem, and internet economy at-large to survive? What do you think consumers needs to understand about this value exchange?

The online publishing ecosystem has grown up on the basis of an implicit value exchange, where users view advertising in return for access to quality content. It’s just that this exchange was never communicated to users. Ad revenues are vital to cover the costs associated with producing and publishing quality content but users haven’t necessarily been aware that the content they consume is predominantly funded by their eyeballs, and their data.

With issues such as ad blocking and the rapid shift of content consumption from desktop to mobile, publisher revenues are under threat. The online media ecosystem is still a young industry and needs to be solvent to continue on its development path. Without funding we will be unable to secure its evolution and could quickly find ourselves in a world without free speech.

The value exchange must be explicitly communicated to consumers so they can choose how they would prefer to pay for the online content they consume.

Please share more on how your product ‘Dialogue’ works, for both publishers and consumers. What about your ‘ContentPass’ offering?

Dialogue is our content compensation platform and is the first solution of its kind – allowing premium publishers to directly message consumers and offer them a variety of compensation choices. These choices include opting into an ad-supported experience, making a direct reader payment through AltPay, purchasing a subscription, or providing data through authentication.

Sourcepoint has partnered with many of the world’s largest premium publishers to pioneer the messaging standard as a viable solution to the continuing industry debate. Publishers that use Dialogue can develop audience segments, create targeted messaging strategies to understand users’ content compensation preferences, and execute campaigns leveraging that data.

ContentPass is a cross-publisher subscription product we are currently developing. It will provide consumers with an additional compensation option in the form of a multi-publisher subscription offering. ContentPass will be complementary to existing paywalls or site subscriptions and will enable users to make an explicit monetary payment in return for accessing a wide breadth of digital content across multiple publisher sites.

Sourcepoint works with premium, brand-name publishers such as AOL, Dennis, and Gruner & Jahr, to name a few. Do you typically only work with comScore 100 publishers, or do you have plans to work with mid-long tail publishers as well?

Our team has a tremendous amount of experience in offering technology and services to these premium publishers. We have a deep understanding of the unique challenges they are facing, and tailor our products and services accordingly. That said, as our subscription and payment products evolve, we believe we’ll be able to move towards the torso of the internet and help a set of smaller publishers as well.

In your estimation, what is the trajectory of growth for consumers using ad blocking? What countries or continents do you think ad blocking is most severe?

Growth in the use of ad blockers varies greatly by market, but the addition of an ad blocker to Chrome early next year, along with the tracking limitations that are coming to Safari, may result in a sharp global increase – particularly in mobile penetration – making the growth trajectory hard to predict.

A recent report by GroupM indicates adoption rates have slowed in Western European countries, while steady growth is still evident in the U.S – with eMarketer predicting 30% of U.S. internet users will be blocking ads by the end of next year.

Adoption of ad blockers may not yet have accelerated at the rate some were predicting, but the threat to publishers has not lessened. Ad blocking is still a symptom of poor communication between publishers and users about the value exchange, and compensation choice and transparency must be implemented to reverse the trend.

What are some of the biggest challenges the digital publishing industry faces today?

The introduction of the Chrome ad blocker and the changes to Safari with regards to tracking capabilities, will likely present major challenges for the digital publishing industry next year as Google and Apple use their dominance in the marketplace to advance their own respective agendas. In the case of Google – which dominates the browser market – I anticipate the move may attract the attention of regulators, which could potentially hamper the roll out.

The introduction of the Chrome ad blocker will also coincide with the enforcement of the EU’s General Data Protection Regulation (GDPR), which will require publishers to obtain explicit consent for the collection and processing of consumer data, creating a time of great uncertainty for digital publishing.

Do you have a sense of ad blocking rates, and the growth of these rates, on desktop, as compared to mobile? Are there certain content verticals where ad blocking is more widespread?

The growth in the use of ad blockers on desktop appears to have slowed, and we know these ad block users are primarily motivated by avoiding irrelevant or annoying ads. Traditionally young tech-savvy males were the most likely to install ad blocking software, so verticals popular with these audiences such as gaming and tech were particularly impacted. While this trend still holds true, the latest figures indicate the ad blocking demographic has now broadened somewhat.

The use of ad blockers on mobile is still relatively low in Western countries but in Asia it is far more prevalent, resulting is real monetization problems for publishers. The latest Mary Meeker Internet Trends report shows mobile ad blocking penetration of just 1% in the US, UK, France, and Germany, compared with 13% in China, 28% in India, and a staggering 58% in Indonesia.

That said, the rollout of Chrome’s ad blocking capabilities could have a significant impact on the rates in mobile.

What are some new technologies in the digital / mobile advertising ecosystem that excite you the most?

We’re seeing a new focus on personalizing the content experiences for consumers, which I’m really excited about. Looking across all digital media – especially in music with Spotify and video with Netflix – there is a tremendous emphasis on the deployment of technologies that enable a more personalized, tailored consumption experience highlighting product design and the user experience.

What is your take on the future of monetization for digital-first publishers?

We will see subscription models continue to gain momentum as consumers increasingly understand the value exchange, and these will ultimately work across multiple publishers’ properties. Different types of content will be dynamically bundled together to meet the unique needs of individuals, creating a solution that is sustainable for the publisher and more interesting for the user.

Users will increasingly be able to set their content consumption preferences – which may include a mixture of ad funded content and paid-for content – and have these preferences applied in a unified way across the internet, whether they are listening to Spotify, watching a video on YouTube, or reading an article on The Guardian.

SourcePoint is a content compensation platform that supports a sustainable media ecosystem through a fair value exchange between consumers and publishers. We help publishers quantify their monetization challenges and provides technology to address the issue by increasing the options available for consumers to support the content they love.

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